4
defence expenditure.
The Gov nor referred in a recent telegram to the new 1941 War Revenue Ordinance, and we can, I think, assume that something very much on the lines of the Appendix to this report is now in force in Hong Kong. An Ordinance on these lines will be coming home shortly, and in these circumstances I have not thought it worth while at present to make any close examination of the detailed charges in the legislation.
The report of the Committee is fairly brief,
but can be summarised as follows.
Their examination of existing measures was governed by three main considerations.
(1) That war expenditure during the 1941/42 financial year was likely to be some $5,500,000 above the sum provided in the Estimates, and additional revenue to the extent of $5,000,ould have to be raised to meet it. (2) The yield from business profits tax in the last financial year was excessively small, and
(3) Experience of the present Ordinance had disclosed inequities and loopholes for evasion.
The Committee decided by a majority vote that it would not be prudent to revive agitation by introducing a straight-forward income tax.
They devised a scheme for new "interest" tax which in practise is limited to interest on mortgages, bills of sales, debentures and loans to corporations for firms liable to profits tax. The yield from t taxation on bank fixed deposits, savings banks was thought too small to merit the cost, and → trouble of a demonstrate to the taxpayers who would be concerned.
etc.
As regards business profits tax, they recommended the reduction of the exemption limit by half to $5,000 and a similar reduction to $50,000 in the limit for the lower rate of taxation.
They did not recommend making provision for setting off loss in one year against profits in succeeding years, or any provision for depreciation in respect of the expiry of leases. They did not exempt charitable contributions, A.R.P. expenses, or donations to war funds from profits tax.
They recommended the revision of the scale of allowances for a wife and children to afford relief to salary-taxpayers in view of the rise in cost of living. ✔The above measures, all of which are aimed at securing a more equitable distribution of the burden, are estimated to increase revenue by $1,570,000.
To meet the remaining revenue which had to be found, they recommended the raising of the basic rates of all five war taxes to 6 per cent and 12 per cent which, with the estimated annual yield from the recent duty on toilet preparations, are thought sufficient to meet the sum required.
? put by.
Mr. Caine will probably like to
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17.
3.9:41.
The Gov: will no doubt report the
action taken..
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fir interesting report